Look around Balochistan, and you may not see much. Pakistan's largest province is also its poorest and least inhabited – an expanse of rocky deserts and ramshackle villages where hardy tribesmen live by ancient laws. But to outside eyes, Balochistan's barren sands glisten with hidden value.

But for the black-turbaned clerics commanding the Afghan Taliban, the desolate province offers something else: a welcoming rear base. As the Taliban insurgency oozes across Afghanistan, Nato generals complain that the fighting is being directed from Balochistan.

In a bleak report to President Barack Obama last September, the US commander in Afghanistan, General Stanley McChrystal, said the "Quetta shura" – a 15-man war council based in or around the Baloch capital and led by Mullah Muhammad Omar, his deputy Mullah Baradar and his military commander Abdullah Zakir – was dictating the pace of the war. It posed the greatest threat to western troops, and was already planning for the 2010 fighting season, McChrystal said. "Afghanistan's insurgency is clearly supported from Pakistan. The Quetta shura conducts a formal campaign review each winter, after which Mullah Omar announces his guidance and intent for the following year." Yet efforts to break up the Taliban's Pakistan sanctuary have so far been concentrated to the east, in Waziristan. Here, CIA-led drone strikes hit al-Qaida and Taliban hideouts, while the Pakistani army battles with the Tehrik-i-Taliban Pakistan – a militant faction that strikes Pakistani cities with suicide bombs. On 17 December, drones fired 10 missiles at a house in North Waziristan, killing at least 12 people.

But in Balochistan militants broadly known as the "Afghan Taliban" operate without fear or hindrance. The long and largely unpatrolled border touches Kandahar, Zabul and Helmand, where almost 10,000 British troops are stationed. Commanders there complain that the Taliban are supplied in men, weapons and bomb parts from Balochistan. But British diplomats are strangely silent, worried that criticism could jeopardise counter-terrorism co-operation with Pakistan.

The Americans, however, are taking a more direct approach. Obama's announcement of another 30,000 troops for Afghanistan has triggered a diplomatic offensive across the border in Pakistan. Officials including the CIA director Leon Panetta and the military chief, Admiral Mike Mullen, have visited, urging Pakistan to act forcefully. Specifically, they want action against Sirajuddin Haqqani, a warlord with a network of fighters in North Waziristan. They also want to extend the controversial drone campaign to include the Quetta shura in Balochistan.

"It makes perfect sense to focus on Balochistan, which has been largely neglected until now," said Art Keller, a former CIA case officer who worked in Pakistan in 2006. "The question is how."

Such talk deeply irritates Pakistan's military. Pakistan officially ended its support for the Taliban in 2001, and since then has become embroiled in a dirty war against national insurgents in Balochistan. But although it denies covertly supporting the Taliban, the military has conspicuously turned a blind eye.

Five years ago, in a shop selling cassettes of Osama bin Laden speeches in Quetta, two young fighters told the Guardian they were enjoying a rest after a busy stint fighting Americans in Afghanistan. Two years later, Balochistan's health minister delivered the oration at a funeral for a Taliban fighter killed in action near Kandahar.

Things have tightened up: the Osama tapes are no longer sold, and holidaying fighters are more discreet. But the safe haven remains. Wounded fighters are quietly ferried across the border for treatment; commanders find recruits in decades-old refugee camps along the border. The violence is spilling into Balochistan itself: last summer Nato supply convoys heading for the border came under attack for the first time.

"The whole war in Afghanistan is being launched from here," said Abdul Rahim Mandokhel, an outspoken senator from Zhob in northern Balochistan. He accuses Pakistan's intelligence agencies of carrying out a "double" policy. "One thing is clear: the area is being used for cross-border offences," he said.

So far, the only western intervention in Balochistan has been covert. A former Nato officer said SAS commandos had raided heroin convoys along the province's unmanned border in 2002, 2003 and possibly later. "The SAS was performing a service to the rest of the coalition," he said, explaining that other western forces were not allowed to attack drug smugglers at the time.

US special forces have also been active along the border, in the tribal belt east of Balochistan. The source said US commando units had conducted four cross-border raids into Pakistan since 2003. Only one, in September 2008, was reported. The first three went undetected thanks to "constant reporting about American spies" in the tribal belt.

The former Nato officer said: "There's so much bullshit out there – the militants blame everything on American soldiers or spies or helicopters. So [when we did act] it was real easy to become part of the background noise." A US embassy spokesman in Islamabad declined to comment.

The new US approach to Balochistan is driven by battlefield realities. By next summer 30,000 western soldiers – a third British, the rest mostly American – will be based across the border in Helmand. Seth Jones, a civilian adviser to the US special forces commander in Afghanistan, said this month that the US must "target Taliban leaders in Balochistan" through an expanded drone strike campaign. Pakistani officials trenchantly oppose the idea.

"We can't fight everyone, everywhere. We need to be pragmatic. And we will not be dictated to," said a senior official with Inter Services Intelligence (ISI), speaking on condition of anonymity. The official admitted that insurgents "do come and go" in Balochistan, but insisted the ISI was already cooperating with the CIA in the province, citing 60 joint raids over the past year.

Drone strikes in densely populated Quetta would be "disastrous", he said, both in terms of civilian casualties and anti-American hostility. "I think this is just pressure tactics, the Americans aren't stupid enough to [extend drone strikes]. But if their objective is to destabilise Pakistan, that would be a good way to do it."

Analysts say Pakistan is playing a complicated strategic game – fighting the "bad" Taliban in Waziristan, but secretly allying with the "good" militants attacking Afghanistan. "I can imagine the Pakistanis symbolically allowing the Americans to take out a few guys from the Quetta shura," said Rifaat Hussain, a defence studies professor at Islamabad's Quaid-I-Azam University. "But I can't see them entirely turning the tables. Pakistan's main concern is not to burn its boats with all shades of the Taliban."

The reason, he said, is India. Fearing Indian influence in Afghanistan, Pakistani military planner see the Taliban as their ticket to influence once western forces depart. Obama announced a US withdrawal starting mid-2011.

"They see these guys as their allies in the post-American scenario – a strategic asset to be used when power is up for grabs in Afghanistan," he said.

American officials are becoming aware of Pakistani concerns. "Increasing Indian influence in Afghanistan," McChrystal wrote, "is likely to exacerbate regional tensions and encourage Pakistani countermeasures." A former US official said the Obama administration was aware of a possible backlash, should drones start hitting Balochistan.

But, the source added, there is a growing recognition that "if we are serious about going after targets in Balochistan, particularly Quetta, then we'll have to do it ourselves". And, he added, should military casualties continue to rise across the border, drones could be sent in regardless of what Pakistan's government says.

"We've already established that precedent with the Pakistanis," he said. "We told them: 'We want you to do this.

In Balochistan, mutilated corpses bearing the signs of torture keep turning up, among them lawyers, students and farm workers. Why is no one investigating and what have they got to do with the bloody battle for Pakistan's largest province?